Micron Technology Inc, the largest US maker of computer memory chips, is on track for its shares to rise by the most in six months after announcing surprisingly strong sales and profit forecasts, helped by demand for artificial intelligence (AI) products.
Fiscal first-quarter revenue would be about US$8.7 billion, the company said in a statement on Wednesday. That compares with an average analyst estimate of US$8.32 billion. Profit would be about US$1.74 a share, higher than a projection of US$1.52.
The rosy outlook is the latest sign that Micron is benefiting from a boom in AI spending. Orders for high-bandwidth memory have added a lucrative new revenue stream for the company and other chipmakers. The technology helps to develop AI systems by providing more rapid access to massive pools of information.
Photo: Reuters
Demand has been outpacing supply, allowing Micron to boost prices and secure long-term guaranteed contracts. It has already sold out of the product for this year and next year, the company said on Wednesday.
Micron shares rose by about 15 percent to US$110.60 in premarket trading on Thursday. If the gains hold, it would be the biggest intraday increase since March 21.
Results from Micron’s fiscal fourth quarter also handily beat estimates. Revenue increased by 93 percent year-on-year to US$7.75 billion for the period that ended Aug. 29. Excluding certain items, profit was US$1.18 per share. On average, analysts had estimated a profit of US$1.12 per share and revenue of US$7.66 billion.
Micron has an edge because it is the first chipmaker to reliably offer more advanced memory in high volumes, executive vice president of operations Manish Bhatia said in an interview.
With companies racing to beef up their AI software and hardware — and using more memory in the process — Micron is in a good position, he said.
The chipmaker is also emerging from a slowdown in demand for PCs and smartphones, two of the biggest markets for memory chips. Device shipments are now growing again. Those devices would increasingly feature AI functionality that requires more memory chips to work properly, adding a further benefit, Bhatia said.
Micron makes DRAM, a type of chip that temporarily holds information and works alongside processors from companies such as Nvidia Corp and Intel Corp. It also makes nand flash memory — semiconductors that store information in everything ranging from data-center computers to smartphones. The company competes with South Korea’s Samsung Electronics Co and SK Hynix Inc in the memory market.
“Robust AI demand drove a strong ramp of our data center DRAM products,” Micron chief executive officer Sanjay Mehrotra said in the statement.
“We are entering fiscal 2025 with the best competitive positioning in Micron’s history,” he said.
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